08.02.2019

Return of the unicorns

As time runs out, Theresa May is still trying to square the Brexit circle, writes Eddie Ford

Though it often feels with Brexit that we are stuck in a time loop, there are some signs of movement - which might be cause for alarm if you are a hard Brexiteer who wants out of the European Union, regardless of whether there is a deal or not.

On February 3 the Daily Express ran a story, picked up by other media sources, about how Theresa May has instructed civil servants to begin “serious work” on developing policies predicated on remaining within the EU’s customs union - something she has repeatedly ruled out. Of course, this happens to have the distinct advantage of being essentially the Labour Party’s position - May met Jeremy Corbyn last week, after which a spokesperson for the Labour leader said the prime minister had shown a “serious engagement in the detail” with his proposals for a permanent customs union and a “close” relationship with the single market.

In many ways this makes perfect sense. Without the support of scores of Labour MPs, even if Corbyn himself still refused to drop his opposition to a “Tory Brexit”, May has no chance of getting her withdrawal agreement through parliament - as amply demonstrated last month by her crushing 230-vote defeat. Unsurprisingly, she is coming under increased pressure from cabinet ministers to drop some or all of her self-imposed ‘red lines’ that have only boxed her into a corner when it comes to negotiations with the EU - ditto the March 29 deadline, as it is now widely accepted that article 50 will have to be extended, even if only to make time for all the necessary legislation to be passed (assuming the EU agrees). Following her parliamentary humiliation, Michel Barnier stated - not for the first time - that the European Council has “always said” that if the UK “chooses to shift its red lines in the future” and “makes the choice to be more ambitious and go beyond a simple free trade agreement”, then naturally the EU will be “immediately ready to go hand in hand with that development and give a favourable response”. Barnier added, however, that there could be no renegotiation of the actual withdrawal agreement or the dreaded backstop.

What this “serious work” exactly entails is totally unclear, but the broad picture is quite simple - Britain will not be able to strike buccaneering free trade deals here, there and everywhere with countries outside the EU. The final death of the Brexit dream will doubtlessly trigger resignations from the cabinet and backbench outrage from the European Research Group and others - not to mention screams of ‘Betrayal!’ from the rightwing press. Dominic Raab, the former Brexit secretary, has said that staying in the customs union would be a “flagrant breach” of a manifesto commitment and “suffocate all the opportunities of Brexit”. Yes, Dominic, but at least it would probably get through the Commons - almost any deal is better than no deal. How long Theresa May would last is an entirely different matter, of course.

But if we have an 11th-hour commitment to a customs union, hence avoiding a hard Brexit, that means we get the 18-month or longer transition period. Yet the embarrassing political truth is that such an arrangement can only lead to Brino - ie, ‘Brexit in name only’. The UK is going to end up a ‘rule-taker, not a rule-maker’. Obviously, this does not mean that Britain will have regressed to a ‘colony’ or ‘vassal-state’, as some ERG-types daftly say. But, on the other hand, it is a bit of a humiliating comedown when a former global imperialist power will have the quality of its products and goods - amongst other things - determined in Brussels without any proper input to the decision-making process. In which case, what on earth is the point of Brexit?

Meanwhile, you have Nissan confirming it will be abandoning plans to build a new model for one of its flagship vehicles at its Sunderland plant. Back in 2016 the Japanese car manufacturer announced it would go ahead after receiving “assurances” from the government that it would not be “adversely affected” by Brexit - we now know this involved a previously secret package of state aid to Nissan that could have been worth up to £80 million. Clearly, there were other factors behind the decision, such as falling demand for diesel vehicles. But it is significant when a company cites “continued uncertainty” about the UK’s future relationship with the EU as a major worry.

You do not have to be a genius to work out that profound uncertainty will cause companies to think twice about investing millions in the UK.

Compromise

May will be trudging back to Brussels on February 7 with a new ‘mandate’ after the passing last week of the ‘Brady amendment’ by a majority of 16 MPs, calling on the prime minister to negotiate “alternative arrangements” for the Irish border backstop.

Three possible options have been suggested: a time limit, an exit clause or the use of unproven technology - but all of these have been comprehensively rejected by the EU. A time limit or unilateral exit mechanism would mean that the backstop ceases to be a cast-iron insurance policy - either you have a backstop or you don’t. As for a miraculous technological solution, that has already been suggested ... and rejected. So there is absolutely no prospect of a breakthrough on the backstop. The fundamental problem is that the government went into negotiations with a set of impossible demands, wanting all the benefits of EU membership without actually being a member of the club - free movement of goods without the free movement of people. The EU was never going to consent to the UK having its cake and eating it.

Showing the direction May is heading, she upset Brexiteers with her Belfast speech on February 5. There was no more talk about “removing” or “replacing” the backstop: rather just seeking “changes” to it. Indeed, she insisted, there was “no suggestion” Britain would leave the EU without an insurance provision to protect against a hard border in Northern Ireland - technology could only “play a part” in any alternative arrangements, never be a fix in and of itself. May declared that she would never allow a hard border to be erected, but at the same time it was necessary to get the deal through the Commons.

This follows on from comments made by Arlene Foster, leader of the Democratic Unionist Party, who talked about replacing “the current backstop”, as opposed to removing it entirely - something demanded by the ERG. May herself, lest we forget, told parliament that she would be asking the EU for “a significant and legally binding change to the withdrawal agreement” - implying that the actual text would have to change. But it will hardly be a new phenomenon if she says one thing and does another.

Sensing betrayal, as always, one ERG source complained, “Even if she didn’t mean what she said, we do.” In fact, hard Brexiteers have warned May that the only proposal they are likely to support in order to break the Brexit impasse is a version of the “Malthouse compromise”. Named after junior minister Kit Malthouse, who first brokered it, this is a proposal to replace the backstop with alternative technological arrangements to prevent the return of a hard border - yes, the unicorns are back again. It proposes to offer the EU two options. Plan A proposes an extended transition period, which would remove the backstop thanks to as yet undetermined technological checks - if this fails, plan B would also extend the transition arrangement until December 2021 to allow for a ‘managed’ no deal. Predictably, one EU official described the plan as “bonkers”.

Whatever the fantasies of ERGers, the EU will not restart renegotiations on the withdrawal agreement. Yes, it has come up with last-minute fixes in the past, such as guarantees to secure Belgium’s ratification of the EU-Canada trade deal, or Irish ratification of the Lisbon treaty, but these tend to be exercises in fine-tuning rather than rewriting entire deals - let alone substantial concessions to a country leaving the club, with all the potential political dangers that poses.

Narrative

With regards to renegotiating the withdrawal agreement, be careful what you wish for. For instance, one recent official EU document referred to Gibraltar as “a colony of the British crown” - meaning what? In the hypothetical event of new talks on the withdrawal deal and the backstop, Spain and other EU countries could demand as a price that the UK hand control of the rock to Spain. In other words, you could end up with worse terms and conditions - as Greece found out to its cost, when it reopened talks on the EU’s punitive bailout plan: it was subjected to even more austerity measures.

One thing you can say with absolute certainty is that the EU will be no easy pushover. It is faced with an extremely weak minority government that cannot get even its most important pieces of legislation through parliament. If anything, expect further intransigence - even tougher demands. Donald Tusk, the president of the European Council, was probably not joking when he said there was a “special place in hell” for those who pushed Brexit without having a plan on how to deliver it. Does that sound like a man about to make compromises and concessions?

Nigel Farage has already received £1 million to launch a new political party if the EU elections do end up going ahead with British participation. It is easy to imagine the ERG - itself operating very much like a party within a party - striking a non-aggression pact with this new formation. The slogans in such an election would be about the treachery of big business, Whitehall mandarins and Labour remainers, an out-of-touch elite that has no backbone or patriotic spirit - a potentially powerful narrative. Declining imperial powers do tend to dream about the ‘good old days’ and resent their current lowly position. The EU negotiations have made it absolutely clear that Britain is no longer a global colossus that can command others to do its bidding.

Then there was May’s pathetic bribe to various Labour MPs. Bunging some extra money to their constituencies if they vote for her deal - a disgraceful offer, as Jeremy Corbyn correctly pointed out. The problem is austerity itself, not the lack of local arrangements. May’s offer is an expression of near panic, as a no-deal Brexit becomes a very real possibility, despite the apparent shifts in her stance on the backstop and customs union. But here we have the central paradox: there is no majority in the Commons for no deal, or wish for it from either business or the state bureaucracy - thus something big has to give within weeks, whatever that could be.

Yet the latest opinion poll from Opinium - quite incredibly, given the 230-vote defeat and general Brexit chaos - shows the Tories with their biggest lead since the last general election. They now have a seven-point lead over Labour, whose support fell from 40% to 34%, while Tory support has risen from 37% to 41%. The poll suggests that Labour has lost support from both ‘leavers’ and ‘remainers’, the party being pulled in all manner of ways over Brexit. The irony, of course, is that a general election would not solve the problem for Theresa May - it could even make things worse.